TLR Productions issued $10,000 of 6% bonds payable when the market rate was 8%; therefore, they will sell them for more than $10,000.

Question

Quizplus · Accepted Answer

When the market rate is higher than the bond's coupon rate (in this case, 8% > 6%), the bond will be sold at a discount below its face value. Therefore, the bonds payable from TLR Productions will be sold for less than $10,000, not more.

TLR Productions Issued $10,000 of 6% Bonds Payable When the Market